Written by Sean McPheat |
Let’s face it, your customers are your business’s most valuable asset. In simple terms, the more they buy, the more money you’ll make. The thing is, about 20% of your customers will generate about 80% of your revenue. So, it makes perfect sense to focus on these customers to ensure continued profitability.
And that’s where an effective account management strategy comes in. It ultimately allows you to build and nurture customer relationships which, in turn, results in more repeat sales, maximised revenue, and increased customer satisfaction.
With that in mind, we’ll look at account management strategies in more detail in this post. More importantly, you’ll learn how you can develop an account management strategy of your own.
Before looking at how you can create an account management strategy for your business, it’s important to understand what an account management strategy is.
Generally, account management is about nurturing customer relationships. Compared to sales that are transactional in nature and focus on landing a customer, account management is relational with the goal of increasing the customer lifetime value (CLV) of every customer.
Here, if we consider what account management is, the account management strategy is the plan you’ll use to build these relationships with your customers, generate growth for your business, and increase your business’s profitability.
Now we’ve seen what account management and account management strategies are, there are certain questions flowing from this.
The first question is: What is key account management? In essence, key account management focuses on increasing profitability by building long-term relationships with key customers. These key customers are the 20% of your customer base that brings in 80% of your revenue. Simply put, these are your business’s most important customers.
Considering the above, it’s easy to see why an account management strategy is even more important when it comes to these customers. Ultimately, because no business has unlimited time and resources available, it makes sense to focus on those accounts that bring in the most revenue.
Considering the importance of an account management strategy in building relationships with customers and increasing profitability, the next question is: When do you need an account management strategy?
Typically, when deciding if you need an account management strategy, you’ll consider the following aspects:
Now that we’ve seen what an account management strategy is and what you need to consider when you want to implement one, it’s time to look at some of the best practices you need to implement when you do.
Simply put, it’s crucial that you know and understand every detail about your customers. This is the only way in which you’ll be able to prioritise your key accounts. This means you’ll not only need to know their businesses inside and out, but you’ll also need to know the important stakeholders of every customer.
Here, it’s also important to remember that your key account manager shouldn’t be the only point of contact your company has with your key accounts. For instance, if this is the case, what would happen if your key account manager left your company or is unable to work due to illness?
It’s therefore vital that you build relationships with the stakeholders in your key accounts to prevent this. Another benefit of knowing your customers is that you’ll be able to align your product offerings to your key accounts needs, requirements and expectations. We’ll deal with this aspect a bit later.
When prioritising key accounts, it’s vital that you choose these accounts wisely. Simply put, you don’t want to waste time and resources on non-key customers. In turn, you can’t afford to not spend time and resources on key accounts that bring in most of your revenue.
But how do you do this? One of the simplest ways is to look at accounts that contribute a significant amount of your revenue and analyse what your revenue loss would be if you lose the account. If, in this case, there would be a significant impact on your revenue, the account will likely be a key account.
You could also consider choosing your key accounts based on a set of clearly defined criteria that define what a key account is. This will allow you to focus on those aspects that make your customers a key account. Another benefit of this is that it allows you to change your criteria as your business, customer base, and market conditions evolve.
You should have dedicated key account managers that focus solely on the management of your key accounts. In this way, they won’t need to shift their attention between sales and account management which, ultimately means, you’ll see better results.
Keep in mind, though, that key account managers need to have a very different skill set compared to salespersons. Remember, we mentioned earlier that sales are transactional in nature and focus on landing deals whilst account management focuses on building relationships. And this is what great account managers do.
You’ll need to take this into account when finding the right people for key account management positions. Another key ingredient to your success is that you continuously invest in your key account managers and provide them with the right tools to effectively build relationships with the right stakeholders.
You should also do a needs assessment on each of your key accounts that will show you what their pain points are and how you’ll be able to solve their problems and eliminate their challenges.
Remember, the goal of key account management is not only to grow your business but to help our customers grow theirs, so it might be worth your while to also identify opportunities for partnerships.
For your account management strategy to be most effective, you’ll also need to carefully develop your communication strategy. To do this, you’ll need insights into the communication matrix of each key account.
In other words, you’ll need to track all communications between the stakeholders of your key account and your team. In turn, this will show you the trends and patterns in the communication with your customer. As a result, you’ll be able to see whether your communication is on track or whether your strategy needs more work.
Finally, it’s crucial that you know your competition. This will allow you to know where your strengths and weaknesses are in relation to them. In turn, you can then decide on what customers to focus on in your account management strategy.
Once you know what your key accounts’ pain points are and how you’ll be able to solve their problems, you should develop an action plan for every key account.
In this way, you’ll be able to show them that you understand not only their goals but also the challenges they face. Also, when you illustrate effective solutions for their problems, you’ll lay a solid foundation for building trust and lasting relationships.
Keep in mind that, in addition to these best practices, the are several other managing accounts tips that you can use to make your account management strategy more effective.
For effective account management, you’ll need a consistent process that you’ll be able to follow for each key account. You’ll then be able to adapt this process depending on the specific account.
For example, if an account requires a lot of attention, you’ll go through the stages of your process in more detail. Conversely, if the account requires less work, you’ll be able to move through the stages quicker.
These key stages are:
Considering everything mentioned above, what should your account management plan include? Simply put, to be successful, your account management strategy should include aspects like:
Ultimately, account management is based on a specific structure that allows you to increase the amount of revenue you’ll be able to generate from each account. Here, the key elements of the structure are:
If you want to extend the customer lifetime value of every customer, it’s vital that you implement an account management strategy that will help you build solid relationships with your customers. Hopefully, this post helped illustrate the things you’ll need to consider when developing your own account management plan.
If you want to up your team’s account management skills, why not consider MTD Sales Training for your training needs. Through our Account Management Training, Sales Training, and other courses, we can provide you and your people with the skills and behaviours needed to make a massive difference to your organisation.
Updated on: 7 December, 2021
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